HDFC Ltd Announces Merger With HDFC Bank

Synopsis- With the completion of this project, HDFC bank will be able to offer good competitive prices for their housing products, thus resulting in the reduction of private lenders’ proportion to unsecured loans. 

On Monday one of the biggest banks HDFC Bank and HDFC Ltd announced a merger. The bank has confirmed that according to the board they have validated the amalgamation of HDFC investments and HDFC Holdings with HDFC Banks. The authorities also said that as per the merger of HDFC and HDFC bank, 42 shares of HDFC Bank will be given for every 25 shares of HDFC. Although the companies still think the deal to be subject to regulatory approvals and will be concluded by the second or third quarter of the financial year starting in 2023.

Once the merger is complete the public shareholders will own 100 percent shares of HDFC bank, while on the other hand, the existing users will only have the right to 41 percent of HDFC bank shares. The bank also said that due to the merger the transactions are expected to halt for the next 18 months due to the completion of regulatory approvals and other customary closing conditions. The bank in its statement said, 

The combined entity will bring together complementary strengths of the two organizations, enabling a rewarding customer relationship.” 

They also added that post the merger customers of HDFC bank will be offered mortgages as a core product in a very smooth way. 

The statement further added, 

HDFC Bank will also leverage the long tenor mortgage relationship to offer varied credit and deposit products enabled through better insights throughout the customer life-cycle. This will result in an enhanced value proposition and customer experience for all customers of the combined entity.” 

With the completion of this project, HDFC bank will be able to offer good competitive prices for their housing products, thus resulting in the reduction of private lenders’ proportion to unsecured loans. 

HDFC also stated, 

The merger is subject to the receipt of requisite approvals from the Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), the Competition Commission of India, the National Housing Bank (NHB), the Insurance and Regulatory and Development Authority, the Pension Fund Regulatory and Development Authority, the National Company Law Tribunal, BSE Ltd and the National Stock Exchange of India Ltd and other statutory and regulatory authorities, and the respective shareholders and creditors.”

As per the plan of merger, HDFC Limited will merge with the HDFC bank along with all their assets. The merger of India’s largest housing finance company HDFC Ltd along with its assets worth Rs 5.26 trillion and a market cap of Rs 4.44 trillion with HDFC Bank, India’s largest private sector bank by assets with a market cap of Rs 8.35 trillion, is going to make a very big difference in the market.